Greenspan, who served as Fed chair from 1987 to 2006, also called the overall economic data for the United States "not strong."
While the jobs growth has been very significant, there is evidence of weakened productivity, he said.
"That is a key statistic which tells how the economy is functioning."
On Friday, the Commerce Department will release fourth-quarter gross domestic product numbers.
"Everyone expects that the growth rate for the fourth quarter is going to be about 2 percent, which is a downward revision from the earlier version. And it may even be less than that," he said.
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He also blamed entitlements for crowding out savings, a critical aspect to investing, and crowding out capital investment.
"Capital investment is key to productivity growth. That has slowed down quite dramatically and productivity has followed right along," Greenspan said.
As for the central bank's performance, the former Fed chair said it is doing some things that work and other things that don't work.
"One which has worked and is working is the significant increase in the amount of purchases of securities on the balance sheet, not to induce lending on the part of the private sector, but to push rates down," Greenspan said.
That has resulted in rising P/E [price-earning] ratios, capitalization ratios in real estate and all incoming-producing assets, he said.
Greenspan's comments came on the heels of Fed Chair Janet Yellen's semiannual testimony to Congress, where she said there would be no interest rate hike for at least the next couple of Federal Open Market Committee meetings.
She also reiterated the central bank would not raise rates before it found confidence in the economic recovery.
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